Research, development declines in Chicago area

Agency calls for more investment to halt loss of manufacturing jobs

February 27, 2013|By Alejandra Cancino, Chicago Tribune reporter

The Argonne electrolyte lab is shown in a December 2011 file photo. (Scott Strazzante/Tribune)

Chicago-area manufacturers have significantly reduced research and development over the past decade, threatening the region's ability to compete globally, according to a report released Tuesday by the Chicago Metropolitan Agency for Planning.

The region lost a third of its manufacturing jobs in the decade ended in 2011 and has lost ground to San Diego, Boston, Silicon Valley and San Francisco, the report said. To reverse the trend, the report called for increasing early stage financing opportunities, more R&D support for smaller firms and a renewed focus on economic development for manufacturers.

"By helping to secure more financing for innovative manufacturing startups, the region can ensure that novel ideas are transferred into production more frequently," the report said.

The report said 375,000 people in the region were employed in manufacturing, making the Chicago area the nation's second-largest manufacturing cluster. By including related support, service and customer industries, the report said 580,000 area jobs were related to manufacturing. Chicago's broad manufacturing base employs high-skilled workers, a competitive advantage.

To remain competitive, the region must focus on supporting advanced manufacturing and related industries. Advanced manufacturing companies are defined in the report as those with products that are difficult to replicate, processes that are continually improved and with people that have specialized skills.

Manufacturing, the report said, is the second-largest component of the region's economy, contributing more than $64 billion annually to gross regional product. "These productivity grains come even as the regional workforce has contracted, showing how firms have found ways to do more with less," the report states.

The report also calls for the region to build off its existing base of basic science and engineering research at universities and national labs, and to find a way to commercialize the results of their research through public-private partnerships. Together, Illinois-based universities and labs spent more than $3 billion on research and development in 2009.

The state has a number of tax credit programs and grants to provide incentives for manufacturing. Among them is the Economic Development for a Growing Economy tax credit program, the state's main economic development program. In 2011, the state issued $161 million in tax credit certificates through the program, which aims to attract and retain jobs and stimulate company investments. The certificates are similar to a voucher. Once a company gets one, it can file it with its taxes to claim the credit. The value of the 2011 certificates were roughly double the previous year, and have increased every year from 2001, when about $10 million in tax credits were allotted. Gov. Pat Quinn has geared many of the larger incentive packages to manufacturers.

The state is working to bolster advanced manufacturing in Illinois, said Sandy Jones, a spokeswoman with the Department of Commerce and Economic Opportunity. The Illinois Manufacturing Laboratory, which was announced earlier this month, aims to make the state's manufacturers more competitive by providing access to cutting-edge digital manufacturing and design tools and worker training.

"We also unveiled last fall a unique $10.3 million public-private partnership that links educational opportunities with business resources to better prepare thousands of Illinois students for careers in science, technology, engineering and math," Jones wrote.